Gates hints at Microsoft plans to compete with iPod

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Gates hints at Microsoft plans to compete with iPod

Redmond (WA) – Speaking before a crowd gathered for Blacks at Microsoft Minority Student Day last Friday, company chairman Bill Gates responded to a question from the audience with apparently carefully worded clues that Microsoft is working on a next generation of its music download service, probably to be implemented in association with partners.

Here is an extended excerpt:

MODERATOR: I’ll take a question from the audience.

QUESTION: Is Microsoft going to develop a handheld like MP3 player to combat iPod, Apple’s dominance of the last year?

BILL GATES: Yeah, Apple has done a fantastic job with the iPod. How many of you have iPods? OK, some.

Well, we are talking with partners about how we working with those partners can make even better music players. We’ve got some in the market today. I’d say in total they may have about 20 percent market share, which is lower than we like and so we’re seeing where we could come together to make a device that’s less expensive and connects in better ways, does photos and videos in better ways.

And so I don’t think what’s out in the market today is the final answer, but again it just shows the magic of software; Apple did a very good job on iTunes, did the user interface design right, and so that means we’ll have to match all that good work and do something even better.

So between us and our partners, you can expect to see some pretty hot products coming out over the next couple of years.

Independent research services may consider Gates’ estimate of market share a bit high, with estimates of Apple iPod market share generally above 80%, and with Microsoft software only playing a role in some of the players sharing the leftovers. However, it’s clear that Gates is trying to shift the discussion about MP3 players to focus on software rather than hardware, perhaps to limit the debate to those elements with which Microsoft can compete (ironically similar to Apple chairman Steve Jobs’ recent tactic with regard to Macintosh vs. Windows machines).

The complete transcript of Gates’ speech last Friday appears here. (